Wednesday October 05, 2022

Lower distribution obligation for fuels to continue in 2023

Published : 20 Sep 2022, 09:04

  DF Report

Photo:Ministry of Economic Affairs and Employment.

The government is proposing to continue lowering the renewable fuel distribution obligation reduction of 7.5 percentage points for 2023, said the Ministry of Economic Affairs and Employment.

The government decided earlier this year to lower the renewable fuel distribution obligation in 2022 to curb the rapid rise in prices.

Fuel prices have been rising fast, partly due to Russia’s war of aggression against Ukraine.

Next year, the distribution obligation for renewable transport fuel would thus be 13.5 per cent.

The aim of the proposed reduction in the distribution obligation is to temporarily lower the prices of transport fuels.

The distribution obligation for 2022 was lowered by 7.5 percentage in July. Compared to the prices in June, the pumping price of diesel decreased by 17 cents per litre and the price of 95 E10 petrol by 24 cents per litre.

Besides the lower distribution obligation, the prices decreased due to the great fluctuations in the world market prices for crude oil.

The distribution obligation means that, at the annual level, a certain percentage of the transport fuels supplied by fuel distributors must be renewable fuels.

The obligation promotes the use of renewable fuels to replace petrol, diesel oil and natural gas in transport. Biogas has been included in the distribution obligation from 1 January 2022 and electric fuels, i.e. synthetic fuels produced with renewable energy, will be included in the distribution obligation starting on 1 January 2023. The aim of the distribution obligation is to reduce emissions from transport.

The lower distribution obligation in 2022 and 2023 means that less renewable fuel is being distributed and, for some time, emissions from transport will be higher.

To compensate for these emissions, the government proposes that the distribution obligation percentage would be raised after 2023. This would promote the use of renewable fuels in the transport sector.

The percentage of the distribution obligation would be raised to 34 per cent by 2030, instead of 30 per cent as proposed earlier. Raising the percentage of the distribution obligation is linked to a number of Government’s strategies and targets, including the Roadmap for Fossil-free Transport, Medium-term Climate Plan and National Climate and Energy Strategy.